Chapter 3
Cost of Direct Materials (formula)
Beginning Inventory + Purchases - Indirect Materials - Ending Inventory = Cost of Direct Materials
Unadjusted cost of goods sold (formula)
Beginning finished goods inventory + COG manufactured - ending finished goods = Unadjusted cost of goods sold
Total manufacturing costs (formula):
DM + DL + MOH(applied)
Net operating income (formula)
Net Op Inc = Gross Margin - SG & A
MOH is applied with a debit to:
Work in Process
The MOH account is debited when:
actual OH costs are incurred
A journal entry that debits work in process and credits MOH is recording
application of manufacturing overhead costs
The period ends, then MOH is debited, credited or closed?
closed
A journal entry that debits Finished goods and credits Work in process records the:
completion of a job
Overhead is applied to Work in process, then MOH is debited, credited or closed?
credited
The journal entry to record $20,000 in depreciation on factory equipment is _______.
debit MOH $20,000 and credit Accumulated Depreciation $20,000
Actual overhead is incurred, then MOH is debited, credited or closed?
debited
The difference between the entries to record depreciation on office equipment and depreciation on factory equipment is that one:
debits Depreciation expense, while the other debits MOH
The journal entry to record depreciation on office equipment
debits depreciation expenses and credits Accumulated depreciation
A journal entry that debits Depreciation Expense and credits Accumulated depreciation records:
depreciation on office equipment
Underapplied or overapplied overhead is the:
difference between overhead applied to work in process and actual overhead
MOH consists of all:
manufacturing costs other than direct labor and direct materials
A credit balance in the MOH account means overhead was ________.
overapplied
When calculating the cost of direct materials on the schedule of cost of goods manufactured the cost of indirect materials is:
subtracted from raw materials used in production
Which account is credited when MOH is applied?
MOH
The journal entry to record accrued property taxes for a factory building debits:
MOH and credits Property taxes payable
The entry to record issuing materials to be used in productions credits:
Raw Materials
A journal entry debiting Cost of goods sold and crediting Finished goods is made when:
goods are sold
The journal entry to record general selling and administrative costs debits:
an expense account and credits Cash or a liability
What is used to calculate Cost of goods available for sale on the schedule of cost of goods sold?
cost of goods manufactured and beginning finished good inventory
To calculate the adjusted cost of goods sold:
add underapplied overhead to or subtract overapplied overhead from unadjusted cost of goods sold
Unadjusted costs of goods sold is calculated by subtracting:
ending finished goods inventory from goods available for sale
The difference between overhead applied to work in process and actual overhead is:
overapplied or underapplied overhead
What accounts are debited when goods are sold on account?
Cost of good sold and Accounts Receivable
Cost of goods available for sale (formula)
Cost of goods manufactured + Beginning Finished good inventory = COG's available for sale
A journal entry that debits Advertising expense and credit Cash would record the incurrence of a:
selling cost
A journal entry that debits MOH and credits Property taxes payable records the:
Recognition of accrued property taxes
MOH is applied with a debit to:
Work in process
The journal entry to record the issuance of direct materials into production debits:
Work in process
When a job is completed, which account is credited?
Work in process
The journal entry to record $10,000 in manufacturing overhead applied to job #40 debits:
Work in process $10,000 and credits MOH $10,000
The journal entry to record issuing both direct and indirect materials into production debits:
Work in process and MOH
Martin Industries had unadjusted cost of goods sold of $450,000. Overhead was underapplied by $30,000. Adjusted cost of goods sold is:
unadjusted cost of goods sold + underapplied overhead: 450,000 +30,000
The following costs would be classified as MOH:
Factory utilities, Factory maintenance wages, Factory rent
When a job is completed, which account is debited?
Finished goods
Himber, Inc. just completed a job that cost $14,000 in direct materials, $12,000 in direct labor, and $8,000 in applied manufacturing overhead. The journal entry to record completion of the job would debit:
Finished goods $34,000 and credit Work in process $34,000
The journal entry to record a cash payment of $400 for insurance on administrative office equipment debits _____ and credits cash.
Insurance expense
A journal entry that debits Work in Process and MOH and credits Raw Materials records the:
Issuance of materials
The Journal entry to record depreciation on factory equipment debits:
MOH and credits Accumulated depreciation
Actual overhead costs may not be proportional to the actual amount of the allocation base used because:
Many actual overhead costs are fixed OR overhead spending may not be under control
The journal entry to record issuing material to be used in production credits:
Raw materials
A company requisitioned $40,000 in direct materials and $30,000 in indirect materials from the storeroom to be used in production. The journal entry to record this transaction would debit:
Work in process $40,000, debit MOH $30,000 and credit Raw materials $70,000
To calculate direct materials on the schedule of cost of goods manufactured, add purchases to beginning raw materials inventory and subtract __________.
ending raw materials inventory and indirect materials used
A journal entry debiting Salaries expense and crediting Salaries and wages payable could record _______.
administrative salaries
The journal entry to record the more accurate allocation of overapplied or underapplied overhead includes entries to:
Cost of goods sold, Finished goods, Work in process, Manufacturing overhead
